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State's Clean Tech Investments Hit $16.5 Million


By Aliza Earnshaw
Portland Business Journal
January 25, 2008


Oregon received just a sliver of the $2.2B invested nationally

After almost no investment in clean tech for nine years, three Oregon
companies received $16.5 million last year.

That comes on top of $12.5 million invested in 2006. Those two years
account for more than three-quarters of all venture capital invested in
Oregon's clean tech companies since 1995.

The three companies that received funding last year are:

Micro Power Electronics Inc. of Beaverton -- $8.5 million.

ClearEdge Power Inc. of Hillsboro -- $6.49 million.

UpWind Solutions Inc. of Medford -- $1.5 million.

Oregon's place in the national clean-tech landscape is still tiny.

American venture capitalists poured $2.2 billion into clean technology
investments last year, more than quadrupling investment in the sector over two years.

The investment numbers don't reflect the whole of Oregon's growing clean
tech industry. The figures gathered by the National Venture Capital
Association, based in Arlington, Va., don't include angel investing in
early-stage companies like Sequential Biofuels Inc. of Eugene.

NVCA also doesn't count $400 million that German company Solarworld AG is
investing in its Hillsboro plant to manufacture solar cells, a plant
that's expected to employ 1,000 people by 2010.

Nor does the Oregon figure include Solaicx Inc., the
California-headquartered photovoltaic company that just opened its new
Portland plant in November.

Solaicx has received $39 million in invested capital, but that is included
in California's figures since the company is headquartered in Santa Clara.

California is clearly the leader in clean tech investing, with more than
$900 million invested last year in 64 companies. Massachusetts is a
distant second, with just under $370 million invested in 15 companies.
Washington came in fourth, with less than $130 million invested, and
Oregon ranks 17th at $16.49 million.

Though clean tech investing is growing fast, the sector still represented
just 7.5 percent of total investment by U.S. venture capital firms in U.S.
companies last year. For comparison, 32 percent of VC investments last
year went into life sciences, and a whopping 53 percent went into
information technology.

But clean tech investing is slated for ultrafast growth. Precisely because
it's such a hot sector, the National Venture Capital Association, and some
seasoned venture capitalists, are sounding a note of caution.

"There will be blood on the floor," said Mark Heesen, NVCA's president.
"There will be money lost, but there will be major successes too.

Governments are demanding change, and our finite resources are demanding it too."

The biggest risk in clean tech investing is that so few venture
capitalists have a deep background in the various technologies and markets
that comprise the sector.

Most venture capitalists working today come from the technology sectors
that most recently yielded great returns: information technology,
semiconductors and software.

That helps explain why certain areas of clean technology have received far
more investment than others. Solar energy and alternative energy together
accounted for almost 38 percent of worldwide clean tech venture capital
investments made by U.S. firms in the first three quarters of last year,
according to NVCA's data. Solar, on its own, accounted for a quarter of
all investment.

"Venture capitalists are more comfortable with solar than with wave energy
or biofuels," said Heesen. That's because solar cell manufacturing is
similar in many ways to microchip manufacturing.

But perhaps not quite similar enough, cautioned Nancy Floyd, founder and
managing director of Nth Power, a venture capital firm that's been
investing in energy technologies since 1997.

Floyd, who lives in Portland though her firm is headquartered in San
Francisco, is one of the few venture capitalists with a background in
energy. She began her career with the Vermont public utilities commission,
and went on to found a wind energy development company and a telecom
network management company.

Floyd pointed out that while many venture capitalists have a great deal of
sophistication in their own fields, they can misjudge how much time and
money it will take to launch a new clean tech company on the market.

"Clean tech markets are global, and there are some complex dynamics in
those markets," said Floyd. "If you miscalculate the capital requirements,
that impacts your returns negatively, or your time to market, or both. I'm
seeing investors miscalculate both."

 

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